Unit 2 Chapter 16: Managing Non-current assets Flashcards
Tangible assets
Assets that have a physical form that can be touched or held
Intangible assets
Assets that do not have a physical form
Historical Cost
The cost of the asset when purchased
Fair value
The price received when selling an asset if it was sold at the time it was acquired by the business
Market value
The price an asset can be sold for
Asset register
A document that shows the assets that a business owns
Finite life
The limited period of time (usually measured in years) for which a non-current asset will exist
Depreciable asset
A non-current asset that has a finite life and thus must be depreciated over that life
Depreciation
The allocation of the cost of a non-current asset over its useful life
Depreciation expense
that part of the cost of a non-current asset that has been consumed in the current reporting period
Depreciable value
The total value of the asset that will be consumed by the current entity, and so must be allocated over its Useful Life
Accumulated Depreciation
The value of a non-current asset that has been consumed over its life so far
Formula for depreciation expense
Residual Value
The estimated value of the non-current asset at the end of its useful life
Useful life
the estimated period of time for which the non-current asset will be used (by the current entity) to earn revenue. (This is usually measured in years)
Formula for Depreciation rate
Asset turnover formula
Formula for ROA (Return on assets)
